Pop Quiz C
Can you explain why and how 300 is in the numerator of BSF calculation? It makes sense how to arrive at 210 for the denominator of BSF
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Can you explain why and how 300 is in the numerator of BSF calculation? It makes sense how to arrive at 210 for the denominator of BSF
Comments
300 is obtained by weighting the number of bond issuers according to the following table:
https://battleacts6us.ca/wiki6us/Odomirok.19-RBC#:~:text=Example%3A%20If%20there,1%20%3D%200.277.
Please confirm that: do I need to redistribute the # of bond issuers to fit the table? like based on 50+70+90=210 need to set to 50, 50,110 to multiple with 2.5, 1.3, 1 to get that 300. And then 300/210-1= BSF
Yes, confirmed.
So Odomirok says, "Bonds that are subject to the bond size factor include unaffiliated bonds in classes 02 through 06, plus non-U.S. government bonds in class 01." I interpreted this to mean once the BSF factor is calculated, only apply it to the bond charges listed. But in the calculation of the BSF factor, should we really exclude the U.S. government bonds? If they're excluded, the company is getting no credit for using U.S. government bonds in their unaffiliated bond diversification.
In my answer I got 0.217 as my BSF Factor, (502.5+501.3+3001+100.9)/410-1, and then applied that to 923.
Thanks!
That sentence applies to both the bonds to use in BSF, and the bond charges to apply the BSF on.
They care about the diversification of non-US-govnt bonds. US-bonds are alright to have as they are.